Australia and China have agreed to top level strategic talks to strengthen and provide direction to an economically crucial relationship which also presents vast opportunities.

In one of the few immediate outcomes from Julia Gillard's high-octane charm offensive to China, which wraps up on Wednesday, a new annual leaders' forum has been agreed, effectively mirroring the close institutional relationships Australia enjoys with allies such as the US, New Zealand, and Britain.

Prime Minister Julia Gillard will announce the leaders' forum on Tuesday as she moves to reposition Australia to take commercial advantage of the colossal expansion and modernisation of the world's largest country by population, and its second largest economy.

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Canberra believes Australia can expect to take much more from the rapid expansion of China than just providing its commodities.

Moving to the second phase of her getting-to-know-you tour, where she is meeting China's new leadership team set to run the emerging giant for the next decade, Ms Gillard will use a landmark speech to the Australia China Business Council in Beijing to outline her vision for the relationship over that period.

Declaring she is ''committed to a relationship which goes well beyond the economy'', she wants to move Australia to the commercial equivalent of poll position arguing it is a wealthy developed nation ideally equipped to meet the multiple challenges, and the lucrative commercial opportunities of China's fast urbanisation.

This could include everything from providing architecture, town planning, and welfare design advice, through to expertise in healthcare and delivery, and education.

''We know a rapidly urbanising nation like China finds a welcome friend in a nation rich in coal and iron-ore like Australia,'' according to an advance copy of her speech.

She will also push closer links with the People's Liberation Army as the two nations work to improve communication and trust amid growing strategic competition in the region.

''Defence co-operation, which is already far broader and more effective than I think is generally understood, will grow,'' Ms Gillard will say, according to her speech.

The PLA has already agreed to join Australia in live-ammunition exercises, exchange programs and humanitarian rescue drills – ahead of other Western nations.

The US and China are jostling for influence in the region and many of China's neighbours fear a strengthening and more assertive Chinese military.

Yesterday Fairfax reported a senior colonel in the People's Liberation Army saying the US was using Australia as a military base in its efforts to ''encircle'' China.

Ms Gillard will defend Australia's investment regime and note that in the past five years, the Australian government has approved $81 billion in proposed Chinese investment in Australia. She wants to use the new annual dialogue to cement more intensive governmental partnerships, as well as closer defence relations.

After meeting President Xi on Sunday night, Ms Gillard said he wanted to take relations ''to a new level''.

On Monday China's official Xinhua news agency said the respective ''prime ministers'' would meet for annual talks, which would mean Ms Gillard would be paired with China's premier, Li Keqiang, who she will meet late on Tuesday.

''Xi said China and Australia have agreed to foster a strategic partnership built upon mutual trust and mutual benefit,'' said the Xinhua report.

''The two countries have also pledged to build an annual meeting mechanism between their prime ministers,'' it said, without saying if it would be a broad ''strategic dialogue'' involving the treasurer and foreign minister.